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A LOW-income housing complex is in foreclosure after the for-profit developer defrauded loans and put its tenants at risk.
Shangri-La Industries opened several complexes in California made specifically for the homeless in 2022 with $100 million that it was awarded to do so from Project Homekey properties.
The old All-Star Lodge motel in San Bernardino and former Good Nite Inn in Redlands are just two of several properties that were turned into a homeless housing properties and are now in foreclosure, ABC affiliate KGO reported.
The housing helped a ton of homeless people get a roof over their head, but in late 2022 the residents received foreclosure notices taped to their front doors.
“In the matter of months, not years, Shangri-La and Step Up gave some of the most vulnerable Californians the dignity of a key, a lock, a door, a place to call home,” California Governor Gavin Newsom said about Shangri-La when it began the project.
However, Shangri-La Industries used the $100 million to secure loans from third party lenders than defrauded the loans and is now facing allegations of breach of contract and fraud.
The California Department of Housing and Community Development filed a lawsuit against Shangri-La Industries.
Ryan Seeling, general counsel at the Department of Housing and Community Development said, “The state is taking legal action as Shangri-La has misrepresented multiple financial considerations,” per KGO.
“And has yet to cure a number of breached contractual obligations to the state and the Homekey program.”
The residents are now worried they will be forced to see homelessness again.
So far, no once has been kicked yet but the anxiety is still there.
“They gave us notices on our door that we might be evicted,” resident Isaac Allen told KGO.
An unnamed resident who lives in the housing with their son said it has been a limbo situation for them not knowing what is going to happen to their home.
“We are in limbo. They just told us we might have the property sold out from under us,” they told KGO.
“I have a 14-year-old-son and im really relieved to not have him out on the streets anymore.
“I hope we don’t have to go back to being homeless.”
The city of Redlands released a statement that it is working with the lender for short-term and long-term solutions.
Their goal is to prevent dislodging the tenants.
“The project is currently near capacity and continues to provide housing and services as it was intended,” the statement said.
Seeling explained that Shangri-La Industries is at fault for the issues that have arisen.
“The difficulties they find themselves in are of their own making,” Seeling said.
“This is clearly spelled out in the complaint.
“HCD will continue to make every effort to ensure Homekey dollars go toward housing individuals experiencing homelessness, and not enriching developers.”
The U.S. Sun has reached out to Project Homekey for comment on the matter.
